Light-rail funding leaves Orange County little room for error

Durham and Orange officials have reached a new, tentative agreement for sharing the local costs of the $3.3 billion Durham-Orange Light Rail Transit project, but one Orange County commissioner wants Durham to pay even more.

Orange and Durham will split the project’s $1.9 billion local cost, which includes $913 million in interest on loans and bonds through 2062. The estimated cost of building and equipping the light-rail system, without interest, is $2.4 billion.

Durham pays 77 percent under the current cost-sharing agreement and Orange County pays 23 percent, based on the amount of light rail line and the number of stations and projected riders in each county.

The two counties will consider changing the cost-sharing agreement this month to 82 percent for Durham and 18 percent for Orange County.

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“My genuine desire really, truly is I believe light rail is the right thing. ... But I really need for you all to work hard to get Durham to understand that,” she said. “There’s all these other things we can do, there’s cost shares, there’s setting up tax districts where you share the revenue – that’s too mushy for me. I need to see the Durham-Orange split (as) significantly different from what we have now.”

Each county is expected to pay its share with money from a half-cent transit sales tax, car rental fees and vehicle registration fees.

Orange County’s revenues – estimated this year at about a quarter of Durham’s revenues – don’t leave a lot of room for error, a consultant told the Orange County Board of Commissioners.

An analysis shows Orange County would have less than $10 million on hand each year to pay toward light rail over the next 45 years, with little left over. Davenport and Company consultant Ted Cole noted the county could have as little $210,725 in 2045, for example, to cover any higher-than-expected costs.

“When you look at this long-term model, when you look at the magnitude of the project, the magnitude of the budget, and you look at the cash balances attributable to Orange County, it’s a very, very thin margin,” Cole said.

Durham County, however, has a cash cushion of $35 million or more through the last year of light-rail debt payments in 2062, he said.

The bottom line, Durham County Commissioners Chairwoman Wendy Jacobs said Wednesday, is that the project’s overall cash balance looks positive for both counties. She noted Durham will need extra cash to pay for a planned commuter rail project.

“Durham is making a huge commitment to this regional project, and while we are going to have higher balances, we actually need those balances because we ... are going to be creating the Wake-Durham commuter rail system, which is the other piece of this system, and that could cost us hundreds of millions of dollars,” Jacobs said. “Orange County is not going to put one penny into the Durham-Wake commuter project.”

The new cost-sharing agreement will include a requirement that Orange and Durham officials meet within 15 days to resolve any future issues, she added. That could range from cutting costs to halting the project, she said.

Orange County may have more money in future years than expected, Jacobs added.

The Gateway station – near Interstate 40 in the Chapel Hill portion of Durham County – has significant potential for increasing Orange County’s tax revenues, she said.

Updated plans

Orange and Durham commissioners are being asked this month to approve updated bus and rail plans, financial plans and interlocal agreements.

The decisions must be made by an April 30 New Starts grant deadline or else the Federal Transit Administration could delay the rail project at least a year.

FTA approval would move the project into the engineering phase. GoTriangle wants to start light-rail construction in 2020 and launch the system in 2029.

The Durham County Board of Commissioners got an update Monday on Durham’s draft Bus and Rail Investment Plan. Durham County will hold a public hearing April 11, followed by the commissioners’ vote April 24.

Orange County’s commissioners will hold a public hearing April 18 on that county’s draft Bus and Rail Investment Plan. They are expected to vote April 27.

While the Orange County commissioners asked many questions and took public comment Tuesday, they kept their remarks to a minimum.

Commissioners Earl McKee and Barry Jacobs have asked Davenport officials for more information about how a delay in the engineering phase could affect the project’s long-term viability and the county’s financial outlook. Jacobs also asked for a more in-depth look at the sales-tax revenue forecast for Orange County.

The draft Orange County and Durham County transit plans are open for public comment until Friday, April 21. Both plans are available at ourtransitfuture.com/plans.

Comments can be submitted via email to info@ourtransitfuture.com; or by mail at Our Transit Future, PO Box 13787, Research Triangle Park, NC 27709. Comments also can be submitted in writing at an upcoming public workshop or shared at a public hearing.